Whether the pay is equal or not for men and women is debatable, but the cost of living is the same for both. This gap often reduces the propensity to save among women.
Moreover, they need to take more career breaks than men to manage their personal lives and care for children. As a result, a lot of women end up relying on the men in the family for financial matters. This may reduce their financial independence.
Women who want to achieve financial independence in every sense must start planning and investing independently. Here are a few mistakes you need to watch out for.
Leaving Financial Decisions Completely On Partners: While it’s a good thing that you trust your partner, you don’t want to be completely uninvolved in financial decisions. Overdependence on your partner in terms of decision-making would mean you won’t be able to develop the experience of managing your finances. This could make you feel helpless in the absence of your partner. So, do not just be a joint signatory in an investment without assessing the liabilities and returns that come along. Participate in discussions at home to plan your savings and expenses every month.
Not Creating Assets For Self: Irrespective of the financial status of the family, women must put an effort to build their own wealth. If your financial responsibilities at home are split between your spouse and yourself, wherein you take care of the household expenses and your spouse pays EMI for house loan, make sure you have a share in the property and other assets.
Delaying Plans For Retirement: Irrespective of your gender, you must start putting together a retirement fund right when you start earning. Delaying it will only lead you to either compromise on the size of the fund or take increased amount of risk in the later years of your life. Remember that a well thought out retirement plan will make you feel financially secure in your post-retirement life without having to depend on anyone.
Risk Aversion: While investing in traditional instruments may seem easy, with little risk to take, you don’t want to limit your financial growth by not exploring other high-return alternatives. High-return market-linked products often come with a certain degree of risk attached. However, this exposure to risk can be mitigated when the investment horizon is long or by allocating a part of your fund in low-risk assets to balance it out.
Not Preparing For Emergencies: Emergency fund is an important component of your financial portfolio, as it helps you tackle emergencies such as job loss, sudden illness better. You don’t want to drain off all your savings or get into debt at a time of cash crunch. Get adequate cover in life and health insurance to protect yourself and family. Also, set aside money every month to create a fund worth six to 12 months-worth your expense to tackle any unforeseen circumstances.
The writer is CEO, BankBazaar.